Google faces antitrust déjà vu as US seeks to break up its digital advertising business

Audio By Carbonatix

After deflecting the U.S. Justice Department's attack on its illegal monopoly in online search, Google is facing another attempt to dismantle its internet empire in a trial focused on its abusive tactics in digital advertising.

The trial that opened Monday in an Alexandria, Virginia, federal court revolves around the harmful conduct that resulted in U.S. District Judge Leonie Brinkema declaring parts of Google's digital advertising technology to be an illegal monopoly. The judge found that Google has been engaging in behavior that stifles competition to the detriment of online publishers that depend on the system for revenue.

Google and the Justice Department will spend the next two weeks in court presenting evidence in a “remedy” trial that will culminate in Brinkema issuing a ruling on how to restore fair market conditions.

“The purpose of a remedy is doing what is necessary to restore competition,” said Julia Tarver Wood in an opening statement for the DOJ's antitrust division.

Wood said that the Google is manipulating the market in a way that is antithetical to free market competition.

“The means to cheat are buried in computer codes and algorithms," Wood said.

An attorney for Google, Karen Dunn, countered that the remedy proposed by the government is reckless and radical, and that the DOJ is attempting to remove Google entirely from the competition.

No matter how the judge rules, Google says it will appeal the earlier decision labeling the ad network as a monopoly. Appeals can't be filed until the remedy is determined.

The case, filed in 2023 under President Joe Biden's administration, threatens the complex network that Google has spent the past 17 years building to power its dominant digital advertising business. Besides accounting for most of the $305 billion in revenue that Google's services division generates for its corporate parent Alphabet Inc., digital advertising sales provide the lifeblood that keeps thousands of websites alive.

If the Justice Department gets its way, Brinkema will order Google to sell parts of its ad technology — a proposal that the company's lawyers warned would “invite disruption and damage” to consumers and the internet's ecosystem. The Justice Department contends a breakup would be the most effective and quickest way to undercut a monopoly that has been stifling competition and innovation for years.

Google believes it has already made enough changes to its “Ad Manager” system, including providing more options and pricing options, to resolve the issues the Brinkema flagged in her monopoly ruling.,

The legal battle over Google's advertising technology mirrors another showdown that the company recently navigated after another federal judge condemned its dominant search engine as an illegal monopoly and then held remedy hearings earlier this year to consider how to stop the misconduct.

In that case, the Justice Department also proposed a severe crackdown that would have required Google to sell its popular Chrome browser, but U.S. District Judge Amit Mehta decided a less dramatic shake-up was needed amid a search market being reshaped by artificial intelligence technology in a decision issued earlier this month.

Even though Google didn't agree with all aspects of Mehta's decision, the ruling was widely seen as a slap on the wrist — a sentiment that has helped propel Alphabet's stock price to new highs. The 20% gain since Mehta's decision helped make Alphabet only the fourth publicly traded company to reach a market value of $3 trillion — an increase of more than $1 trillion since Brinkema branded Google's ad technology as a monopoly in April.

In an indication that the outcome of the search monopoly case might sway things in the advertising technology proceedings, Brinkema asked both Google and the Justice Department to address Mehta's decision during the upcoming trial.

As they did in the search case, Google's lawyers already have been asserting in court papers that AI technology being used by ad network rivals like Meta Platforms is reshaping the way the market works and overriding the need for the Justice Department's “radical” proposals.

The Justice Department is “fighting for a remedy that would vanquish a past that has been overtaken by technological and market transformations in the way digital ads are consumed," Google's lawyers argued leading up to the trial.

____

AP Writer Olivia Diaz contributed to this report from Alexandria, Virginia.